Ivanhoe Mines has sold its Savage River iron ore operation in Tasmania to Stemcor Holdings.
The mine, which was for sale for the past fours, sold for US$21.5m plus a variable payment that will depend on the iron ore pellet price over the next five years.
Stemcor is a global steel trading company based in London but with offices in Australia, from where it will control the operation. Talks first began with Stemcor 18 months ago.
The Savage River mine is Stemcor’s third investment in iron ore in Australia, following shareholding and off-take arrangements with Mt Gibson and Resource Mining Corporation.
The company says it will continue the Savage River operations in line with current management plans and has no intention of changing management, which stays with Australian Bulk Minerals.
ABM managing director Dave Sandy says he is very happy with the sale.
Sandy says Stemcor has indicated its support for a feasibility study into an underground development at the operation following the recent completion of a scoping study that found it technically feasible to block cave a large orebody under North pit (see page 18 February 2005 Australian Mining).
However, Sandy says Stemcor has bought the mine on the current mine plan.
Savage River has a long-term supply agreement with Bluescope for about 1.2Mtpa of pellets until 2007. The remaining production goes to a mix of Asian customers.